Temp Tumult

Industry Fears Regulation Straitjacket

Daimler temps reuters
A Daimler plant in Sindelfingen. The company is amongst those worried that new rules will reduce flexibility.
  • Why it matters

    Why it matters

    Germany’s labor reforms over a decade ago liberalized the temporary work sector, giving companies flexibility to hire more workers when demand increased. Now the government wants to impose more regulation.

  • Facts

    Facts

    • The Cologne Institute for Economic Research conducted a survey of some 400 German companies on government plans to regulate the temporary work sector.
    • The legislation would bring in equal pay after nine months and limit contracts to 18 months.
    • Unions support the new rules but employers argue it gives them less flexibility.
  • Audio

    Audio

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Oliver Franke’s skeptical view of the German government’s new plans to regulate the labor market is only natural. His engineering company, Franke + Pahl, temporarily places skilled workers and engineers with companies. The planned regulation of temp work is therefore nothing less than a frontal assault on his business model.

“But our customers, which include Airbus, Beiersdorf, and Nestlé, are also concerned,” said Mr. Franke, who is managing partner at the firm. They are threatened with the loss of a solution that allows them to respond quickly and flexibly to any changes in demand, he explained.

The business community has been up in arms ever since the ruling center-right Christian Democrats and center-left Social Democrats included plans to limit the use of temporary workers in their coalition agreement.

The new rules would further restrict an employment option that has long been treated with suspicion in Germany, where it has only been legal since 2003 and remains more limited than in most other developed countries. It also comes at a time when the unemployment rate in Europe’s largest economy is at a record low, with many companies struggling to fill slots for skilled workers.

The Confederation of German Employers’ Associations, or BDA, has warned new rules on temporary employment could strangle what is a “key industry for growth and employment.” Labor unions have retorted the limits are a matter of fairness and avoiding the exploitation of temporary labor.

Mr. Franke’s viewpoint is supported by a study obtained by Handelsblatt from the employer-friendly Cologne Institute for Economic Research. “Temporary work is being threatened by a legally imposed reduction without being given the chance to further develop,” said Holger Schäfer, who wrote the report.

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